Home Buying in 90026>Question Details

Lb, Home Buyer in Los Angeles, CA

Question about Real Estate Agents

Asked by Lb, Los Angeles, CA Tue Mar 25, 2008

I recently went into escrow on a condo that I found myself without the help of an agent. After a few months online, I went to the condo complex's sales office and made an offer, which was eventually accepted. In that transaction I made the offer to the real estate agent that was representing all the units in the building. Now as I sign disclosures, there is a form I have been asked to fill out that says that the real estate agency is representing both the buyer and the seller. Should I sign this? They have not done anything for me, and simply took my offer and presented it to the developer. They did not help me negotiate price or get a good deal at all. Also, hidden in a mold disclosure form is a provision saying I agree to pay them $250 upond closing as a service fee. I thought they were paid by the seller. Is this normal / customary? I dont want to pay it. Theis is all getting a little fishy and I wonder how to handle it. Any thoughts?

Help the community by answering this question:


Hi Lb,

California is a Dual Agency state, which means that legally the agent can represent both you and the seller. It also mans that the agent MUST represent your interests as well as the seller's. This can be a challenge to ensure that both sides are treated fairly. Many agents can do this, but some don't do it as well. Given that the agent represents the developer in all the units being offered, you can make your own conclusions as to which side the agent may lean towards, should he/she not represent both sides properly.

The fee is something that I do not charge my client's and personally dislike, because I believe that the fees are part of the service that I provide you. It is like me saying that I am happy to take a commission to sell your home, but you have to pay for the "sale" sign. Having given you my personal opinion, it is not illegal for them to charge a fee. However, all fees are negotiable. Therefore, you can say that you won't sign it and refuse to pay the fee. Keep in mind that you must do this within your contingency period.

I believe that it is always better for a buyer to have his/her own representation in these situations. Whenever an agent is representing an entire development, they have more incentive to help the developer rather than the individual.

If you are beyond the contingency periods, you may want to consider consulting an attorney to help you. If you are still within the contingency period, you may want to negotiate the fee or possibly back out of the deal and get representation of your own. (Please keep in mind that this advice is based upon the information you have provided and that it is hard to provide an accurate opinion without knowing all of the details of the transaction.)

I hope that you are able to come to a resolution that works for both you and the seller, but if it doesn't I would recommend that you get your own representation before looking again. Remember that in our market the seller is usually the one who pays the commission and if you go directly to the listing agent you are not saving money, only ensuring that the listing agent gets all the commission.

Good Luck.
4 votes Thank Flag Link Tue Mar 25, 2008
The bottom line is, the listing agent is trying to rip you off by taking both the seller's and buyer's commission. 6% of the purchase price goes to the agents. 3% to the sellers agent and 3% to the buyers agent. If you showed up without an agent, you are entitled to ask for a 3% reduction in the purchase price because the listing agent has not done a thing to earn that commission. As Patrick Beringer points out, most agents are easily capable of taking advantage of a buyer with little knowledge of the system for personal gain. They are praying on your lack of understanding of the process in order to cheat you out of 3% of the price of the condo. Do not fall for their games. As you have found out, agents add very little value to the transaction and only look to make $ while doing very little work themselves. Agents like Patrick Beringer will tell you so often about how much value they bring to the table, yet does not do you the simple courtesy of explain the very commonly known practice that the agents split the commission. This just goes to show the primary motivation of agents is not in your best interest.
2 votes Thank Flag Link Mon Sep 29, 2008
This is where you are VERY wrong David; an agent is just that; an AGENT, not a negotiator. The buyer is the person with the money to spend and a primary piece of the puzzle in terms of negotiation. An agent is merely the means in which the negotiation process is carried out. Your sense of self entitlement for payment for services that you do not even provide is very telling for how you conduct your business. In this particular situation, the listing agent has done NOTHING to deserve double commissions. Yet you, and others here, are so quick to claim what rightfully belongs to Lb.
1 vote Thank Flag Link Mon Sep 29, 2008
David shows his true colors by stating that the listing agent "should get every penny of the commission they earn" by sitting behind a desk and waiting for you to walk in and make an offer. Tell me David, does the listing agent on this deal deserve the same 3% buyer's commission as the agent who spends 2 months taking Lb around to 30 different condos every weekend, researching comps, and making sure that Lb's offer is in line with current market value? Your misplaced "advice" only goes to prove your selfish motivations.

Lb, Of course agents on this site are going to tell you that the listing agent is entitled to double commission for work they did not do. On top of that, they have the audacity to ask for an additional service fee! What you should do in this situation is find a friend who is an agent (everyone has one, as they are a dime a dozen) and have them represent you. Have your friend take the 3% buyer's commission and refund you most of it. Give your friend a few hundred dollars for the 2 hours of work it will take to finalize your transaction. This way the listing agent is not stealing your money from you, your friend makes a little cash for very little work, and you save a few thousand dollars off the price of the condo. Thank me later.
1 vote Thank Flag Link Mon Sep 29, 2008
Ok, so there's 3 issues here, which I'll give you my personal opinion on:

1. You didn't want to use a buyer's agent in order to save money. Let's say you offered $300k for this unit so it cost you $300k. If you had a buyer's agent and offered $300k the unit would have cost you---$300k. Buyer's agent commissions are paid by the seller. As a listing agent I LOVE it when people make offers without a buyer's agent--Because I know my seller is going to net more this way.

2. The "service fee." I would ask them to cover that from their commission.

3. Agency disclosure form: Sign it if you want the condo. This listing agent who helped you actually BECAME YOUR AGENT when you did the offer and paperwork. Like it or not, this is your buyer's agent--And your buyer's agent also happens to be the listing agent.

The value of a buyer's agent is NOT in finding a place. Anyone can find a house on the web. The true value of a buyers agent is in negotiating better terms and price than most people can get on their own as well as keeping you legal and protecting you from "hidden" surprises.

And to respond to the answer directly underneath this one--AGAIN--Buyer's agent commission is paid by the seller. If you hired an attorney that money would come out of YOUR pocket, so that condo would cost even MORE than if you had just used a buyer's agent. Some people are so determined to be penny-smart and pound-foolish!
1 vote Thank Flag Link Mon Sep 29, 2008
You do not have to pay anything.

You can walk away from this transaction, and maybe you should. It sounds to me as though you are a first time buyer. The BEST thing you can do is to become educated about buying a home. When you purchase a home, one of the most complex and costly transactions you will ever make, you need someone that you can trust.

I sense a lack of trust here. So my recommendation is for you to step back, rethink and to find a Realtor that will represent your interests faithfully. If you would like a referral of a top Realtor in your area let me know.

Good luck/
1 vote Thank Flag Link Sun Sep 28, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
"Taking your offer" and "presenting it" is part of the duties of your Realtor. This would also include making sure the document is properly prepared. It would have been in your best interest to have your own agent who would have negotiated price for you instead of going directly to the sales office. Yes you have a dual agency situation, that you should have been made aware of from the beginning. Some brokers do charge a "service fee" like this, other's don't. They are not doing anything illegal, it's just unfortunate that you were uninformed
0 votes Thank Flag Link Sun Jul 20, 2014
Hi Lb,

This is a sticky situation, but dual agency is legal in California. The listing agent should have informed you that this is/will be a dual agency if you are not represented by your own Realtor. The Agency Relationship should have been one of the first Agreement she presents to you and explain in detail. You may want to check your Agreements that you signed with her. She has a fiduciary duty to both Seller and Buyer, this can be a challenge but it can be done. If you are feeling very uneasy about this situation then you may want to consider talking with your agent/listing agent or back out of the deal.

Best of luck to you.

Dawn Welch
0 votes Thank Flag Link Thu Jul 30, 2009
Oh, and Bill? You understand EXACTLY how it works.
Web Reference: http://optionsrealty.com
0 votes Thank Flag Link Mon Sep 29, 2008
WOW. David. Isn't it up to the SELLER to establish a fee for a cooperating broker? And, once established, it's in the price of the home paid for by the BUYER? You may well establish your total listing fee, but once you offer cooperation, there is no question but that the seller is paying for an agent to bring a buyer, at which point, any rational buyer might (in the absence of a broker) choose to negotiate the fee offered by the SELLER.
Web Reference: http://OPTIONSREALTY.COM
0 votes Thank Flag Link Mon Sep 29, 2008
Bill, yes, I am showing my true colors as a professional. I negotiate with the seller what my commission is going to be be. It is up to me, the listing agent to even offer a commission to a buyers agent. I can offer as little or as much as I want. Its up to me, not the buyer.

If the buyer chooses to go unrepresented, he should then get what he wants. If wants to be represented, he should recognize in order to get representation, its going to cost. DUH

Bill, its seems to me you expect full service representation without have the agent get paid for it.

I dont blame you for not understanding how it works, I blame ill prepared agents who simply would shave their commissions every time a client asked for it. Not only is unethical its illegal.

Bill, its not about greed. Its about being a Professional in what ever business you are in an taking your business seriously.

I feel more like an eductor these days explaining that buyers are "Buyers" not negotiators.
0 votes Thank Flag Link Mon Sep 29, 2008
You are referring to dual agency where the same party represents both the buyer and seller in the transaction. You are not obligated to use this agent if you are uncomfortable with the situation. And, you should be.

Get your own agent preferably an exlusive buyers agent in your area. Try the National Association of Exclusive Buyer Agents for a referral. If you do not wish to use an agent, see if you can negotiate the additional cooperative compensation out of your deal which is likely 3%, but may vary.
0 votes Thank Flag Link Mon Sep 29, 2008
I do understand where Bill is coming from. He may not understand exactly how this works. The Seller of the property signed a listing agreement with the listing agent to sell his property. He has agreed to pay a flat commission to the listing agent to market and sell the property. If a buyer brings an agent, the listing agent gives that agent a portion of his/her commission. As far as total commission amounts, 6% is common, but in a multi-unit condo the listing agent RARELY get's 6%. This agent might be getting 4 or 5%, of which he/she is paying perhaps 3% to the buyer's agent. Now, you say--That 3% should be credited to the buyer, since the buyer didn't bring an agent. But the buyer DOES have an agent--The listing agent who is now acting as the buyer's agent as well.

But guess what--The listing agent works for the SELLER. The listing agent's first loyalty HAS TO BE to the SELLER. See where I'm going here?

Everything is negotiable and we don't know the details of the buyer's offer. Perhaps the buyer brought in a lowball offer and the listing agent had to agree to give back some $ to the seller in order to get the buyer's offer accepted? We don't know, so this topic at best is a general discussion.

Bill, you are certainly entitled to your opinion, and while I do appreciate the publicity, I have to tell you that you really are off base. In many cases I pay closing costs or contribute a portion of my commission for either my client or the OTHER agent's client in order to get a transaction accepted.

My job is to represent the interests of my client, and if my client wants a transaction to happen a certain way I sometimes have to make sacrifices to accomplish that. If I do my job well, I should be compensated. If I could bring you an extra $10,000 today, would you pay me $300 for doing that?
0 votes Thank Flag Link Mon Sep 29, 2008
Bill, you are so way off base. How dare you say, the realtor is trying to rip the buyer off when it was the buyer that walked in uprepresented and chose to submit an offer. Legally speaking, the agent needs to have all disclosures signed. Where does it say and what rule book are reading that says, the buyer is "entitled".

The seller pays the commission to a BONIFIED Professional not a unlicensed buyer.

Do yourself a favor a GET REAL on the Buying Process. Just because a non ethecial agent states a buyer deserves commission does not make it gospel.
0 votes Thank Flag Link Mon Sep 29, 2008
You don't need a buyers agent. You can hire a real estate attorney to help you. I'd estimate about $500 - $1000 . Which is probably much cheaper than 3% buyers agent commission. Good Luck
0 votes Thank Flag Link Mon Sep 29, 2008
my attorney charges 500 per hour.
Flag Sun Jul 20, 2014
LB - You made a "Rookie" mistake. Im sure the many times you looked at the sales office website you must have once wondered, "Should I Hire Someone to Protect My Interests or Should I just do it on my own??"

Well you chose the latter. Irregardless, the agent who accepted their offer has still done thier job to assist you and seller and should get every penny of the commission they earn.
0 votes Thank Flag Link Fri Sep 26, 2008
Hi LB,

I'm with Ray. Every buyer deserves his own representation. Perhaps you should voice your concerns with the dual agent. You should have signed an "Disclosure Regarding Agency" when you made the offer. Did you do this? This document explains dual agency. Look through your copies of your documents to see if you did indeed sign this.

Either way you should explain to your agent that you do not want to pay the service fee. If you don't get a satisfactory response, insist on speaking with the agent's broker.

If you don't complete this transaction, please, please, please get an agent to represent you. I can recommend someone good in your area.

Best of luck,

Karen Miller
0 votes Thank Flag Link Wed Apr 2, 2008
Hi, Lb:

Ray gave you an excellent answer. My agency does not charge a paperwork fee to our buyers...I've always thought that was a bad idea - it is just part of our job and our expenses to do our job.

Before I was an agent a Realtor tried to charge me that fee and I refused...I negotiated with her to remove the fee as I believed it was unfair.

You really should express your concerns to the agent as he/she does represent you AND the seller. A mold disclosure is pretty normal...are you saying they hid the fee within the mold disclosure?

You can consult with a real estate attorney to set your mind at ease.

All my best!
Web Reference: http://www.DotChance.com
0 votes Thank Flag Link Tue Mar 25, 2008
Lb, as previously said, this might vary from state to state. However, here we are supposed to inform buyers and sellers who we are working for by having them sign an Agency Disclosure stating what type of agent we are to that particular client. I am surprised they did not disclose that to you and have you sign something in that regards to this prior to putting the offer in. Here I have two separate documents that sellers and buyers sign in this situation. I mean both parties know with out question that I am acting as a dual agent so I have to remain neutral.

Mold disclosure? For a new property? I am confused on that. My company has an administrative fee that buyers and sellers pay at the closing. This is a common fee, but it has nothing to do with mold.

I am not sure what you can do in your state, but you might really want to talk to a Real Estate Attorney. It really seems they should have disclosed that they were acting as a dual agent and put it in writing prior to writing the offer with you. I think speaking with a Real Estate Attorney may really give you peace of mind if you should continue to proceed.

I hope this information helps! Best Wishes!
Web Reference: http://www.gomelinda.com/
0 votes Thank Flag Link Tue Mar 25, 2008
Hi there, I am a Realtor in Nashville, Tennessee and some things vary from state to state real estate-wise, but if you were buying a condo in a new complex and you went and spoke to the realtor and the realtor made the offer on your behalf to the builder, you may be in a transaction called a "facilitation". This is where the Realtor defaults to a status somewhat like an arbitrator where they don't represent the seller or the buyer. They just act as a go-between for the two. Does that make sense? As for the $250, well, I know that our company has a fee like that to cover the paperwork overhead, machines, anyone having to be hired to help out, etc.... did that show up as a fee to you on HUD 1? As to whether or not you should sign it, you might want to call your local national association of realtors or your county's real estate commission to find out. I would be happy to tell you, but again, it may vary in your state from mine. Hope that helps! We are not all bad!
0 votes Thank Flag Link Tue Mar 25, 2008
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